LOUISIANA AGENT MARCH 2019
A publication of the: Independent Insurance Agents & Brokers of Louisiana
A publication of the Independent Insurance Agents & Brokers of Louisiana
A publication of the: Independent Insurance Agents & Brokers of Louisiana
In this issue:
IIABL STAFF Jeff Albright Chief Executive Officer jalbright@iiabl.com Francine Berendson Director of Communications & Events fberendson@iiabl.com
IIABL Represents You at the Capitol ............................ 5-11 Ethics: Adjuster Says Covered – Agents Knows It Isn’t ..... 12 The Trusted Choice® Brand: Part 1 ........................... 14-17 Member Benefit: ADVOCACY .......................................... 18 Tech Tips: Perils of IE as Default Browser .................. 19-22 RLI Personal Umbrella Rate Change ........................... 24-25 Untapped Market for Insurance Sales ........................ 26-28 Rate & Rule Filings ........................................................ 29
Karen Kuylen Director of Accounting kkuylen@iiabl.com
Predictably Record Breaking ...................................... 30-31 The Myth of Agency Multiples .................................... 32-33 March IIABL Board Meeting Report ............................ 34-37
Rhonda Martinez, CIC Director of Insurance rmartinez@iiabl.com
Cybersecurity Two-Step ................................................. 38 Cajun Two-Step............................................................. 38 IIABL Partners ............................................................... 39
Jamie Newchurch Insurance Services jnewchurch@iiabl.com Lisa Young-Crooks Executive Assistant lyoung@iiabl.com
IIABL Board .................................................................. 40
IIABL Represents YOU at the State Capitol! The 2019 Regular Session of the Louisiana Legislature starts on April 8th. As usual, there are plenty of insurance related bills that could have a dramatic impact…positive or negative…on your insurance agency. As always, IIABL represents you and your customers at the state capitol, supporting legislation that improves our insurance markets, and opposing legislation that hurts our insurance markets. Following is some of the more important bills that IIABL will lobby during this legislative session. If you have questions or concerns about any of these bills, please email Jeff Albright at JAlbright@IIABL.com. You can click on any bill number to view comprehensive information about each bill. The complete list of bills we are tracking are listed on pages 6—11.
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HB 51
Huval, Mike(R)
Provides relative to the admissibility of evidence for failure to wear a safety belt. Bill History: 03-08-19 H Referred to House Committee on House Civil Law Provides relative to the applications for licenses filed with the commissioner of insurance. Bill History: 03-25-19 H Referred to House Committee on House Insurance Provides relative to dump trucks. Bill History: 03-26-19 H Referred to House Committee on House Transportation
HB 128
Anders, Andy(D)
HB 164
Franklin, A.B.(D)
HB 181
Brass, Ken(D)
Provides relative to safety belt use in certain vehicles. Bill History: 03-26-19 H Referred to House Committee on House Transportation
HB 213
Huval, Mike(R)
Provides relative to expedited jury trials. Bill History: 03-27-19 H Referred to House Committee on House Civil Law
HB 229
Huval, Mike(R)
Provides with respect to the use of a wireless telecommunications device while operating a motor vehicle. Companions: HB 619 Huval, Mike (Refiled from 44R Session) Bill History: 03-27-19 H Referred to House Committee on House Transportation
HB 237
Brown, Chad(D)
HB 257
Moss, Stuart(R)
HB 285
Billiot, Robert(D)
HB 288
Hollis, Paul(R)
HB 308
Jordan, Edmond(D)
Prohibits preexisting condition exclusions or other discrimination based on health status. Bill History: 03-27-19 H Referred to House Committee on House Insurance Provides relative to the privilege of certain health care providers against proceeds recovered by injured persons. Bill History: 03-27-19 H Referred to House Committee on House Civil Law Provides for worker's compensation for volunteer reserve police officers. Bill History: 03-28-19 H Referred to House Committee on House Labor and Industrial Relations Provides relative to the administration of large deductible policies and collateral as relates to workers' compensation. Bill History: 03-28-19 H Referred to House Committee on House Insurance Prohibits lifetime and annual limits on health insurance benefits. Bill History: 03-28-19 H Referred to House Committee on House Insurance
HB 311
Norton, Barbara(D)
HB 319
Pierre, Vincent(D)
HB 359
Johnson, Mike(R)
HB 361
Jordan, Edmond(D)
Creates the Louisiana Motor Vehicle Insurance Cost Reduction and Fairness Act. Bill History: 03-28-19 H Referred to House Committee on House Insurance Provides relative to the appointment of an insurance producer as an agent for an insurer. Bill History: 03-28-19 H Referred to House Committee on House Insurance Provides relative to the crime of looting. Bill History: 03-29-19 H Referred to House Committee on House Administration of Criminal Justice Provides for a premium tax on surplus lines coverage that includes fire loss or damage. Bill History: 03-29-19 H Referred to House Committee on House Ways and Means Continued page 8 Louisiana Agent 6
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HB 362
Lyons, Rodney(D)
HB 371
Talbot, Kirk(R)
HB 372
Talbot, Kirk(R)
HB 383
Davis, Paula(R)
HB 401
Emerson, Julie(R)
HB 407
Brown, Chad(D)
HB 411
Landry, Terry(D) Mills(R)
HB 426
Hilferty, Stephanie(R)
Grants certain workers' compensation benefits to members of the classified fire service. Bill History: 03-29-19 H Referred to House Committee on House Labor and Industrial Relations Establishes an independent dispute resolution process for certain out-ofnetwork health benefit claims. Bill History: 03-29-19 H Referred to House Committee on House Insurance Enacts the Omnibus Premium Reduction Act of 2019 relative to automobile insurance. Bill History: 03-29-19 H Referred to House Committee on House Civil Law Provides relative to the admissibility of evidence regarding worker's compensation claims and payments of benefits. Bill History: 03-29-19 H Referred to House Committee on House Civil Law Provides relative to the Louisiana Mediation Act. Bill History: 03-29-19 H Referred to House Committee on House Civil Law Provides relative to the refund of unearned premiums. Bill History: 03-29-19 H Referred to House Committee on House Insurance Provides for insureds to have the option to choose a particular motor vehicle repair shop. Bill History: 03-29-19 H Referred to House Committee on House Insurance Provides with respect to insurance coverage in condominium units. Bill History: 03-29-19 H Referred to House Committee on House Commerce
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HB 437
Talbot, Kirk(R)
Provides for motor vehicle repair estimates by insurers. Bill History: 03-29-19 H Referred to House Committee on House Insurance
HB 445
Amedee, Beryl(R)
Provides relative to attorney advertising. Bill History: 03-29-19 H Referred to House Committee on House Civil Law
HB 455
Landry, Terry(D)
Provides relative to autonomous commercial motor vehicles. Bill History: 03-29-19 H Referred to House Committee on House Transportation
HB 542
Carter, Steve(R)
HB 572
Barras, Taylor(R)
Increases the per gallon excise tax on gasoline, diesel, and certain special fuels and levies an excise tax on electric and hybrid vehicles. Bill History: 03-29-19 H Referred to House Committee on House Ways and Means Establishes requirements for transportation network companies. Companions: HB 575 Magee, Tanner (Identical) 3-29-19 H Referred to House Committee on House Transportation
Bill History: 03-29-19 H Referred to House Committee on House TransHB 575
Magee, Tanner(R)
portation Establishes requirements for transportation network companies. Companions: HB 572 Barras, Taylor (Identical) 3-29-19 H Referred to House Committee on House Transportation Bill History: 03-29-19 H Referred to House Committee on House Transportation Continued page 10
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Continued from page 10
SB 74
Long(R)
SB 75
Lambert(R)
SB 88
Luneau(D)
SB 89
Luneau(D)
SB 103
Smith(D)
SB 107
Gatti(R)
SB 114
Appel(R)
Provides relative to the use of assumed names by insurance producers. Bill History: 03-26-19 S Referred to Senate Committee on Senate Insurance Provides for changes in the producer of record upon written request of the policyholder or first named insured. Bill History: 03-26-19 S Referred to Senate Committee on Senate Insurance Provides relative to the workers' compensation medical treatment schedule. Bill History: 03-27-19 S Referred to Senate Committee on Senate Labor and Industrial Relations Prohibits insurance providers from using credit reports and gender as basis for rate setting. Bill History: 03-27-19 S Referred to Senate Committee on Senate Insurance Provides relative to the unauthorized practice of public adjusting and fraudulent insurance acts by public adjusters. Bill History: 03-27-19 S Referred to Senate Committee on Senate Insurance Adds post traumatic stress disorder to the list of injuries which are compensable for injured public employees as relates to Workers' Compensation. Bill History: 03-27-19 S Referred to Senate Committee on Senate Labor and Industrial Relations Provides for admissibility of worker's compensation payments in a civil proceeding for damages for the same injury. Bill History: 03-27-19 S Referred to Senate Committee on Senate Judiciary A
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SB 148
Hewitt(R)
Provides relative to safety belts. Bill History: 03-28-19 S Referred to Senate Committee on Senate Judiciary A
SB 154
Ward(R)
SB 197
Bishop(D)
Provides relative to civil liability for certain damages involving vehicles and highways. Bill History: 03-28-19 S Referred to Senate Committee on Senate Judiciary A Provides for disclosures in homeowners' insurance policies. Bill History: 03-29-19 S Referred to Senate Committee on Senate Insurance
SB 209
Smith(D)
Provides relative to the crime of looting. Bill History: 03-29-19 S Referred to Senate Committee on Senate Judiciary C
SB 211
Appel(R)
Provides relative to outdoor advertising. Bill History: 03-29-19 S Referred to Senate Committee on Senate Transportation
SB 212
Appel(R)
Requires insurers to report certain commercial vehicle information. Bill History: 03-29-19 S Referred to Senate Committee on Senate Insurance
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Ethics: The Adjuster Says It’s Covered Though the Agent Knows It Isn’t
Bill Wilson, CPCU, ARM, AIM, AAM
Real claim. A dentist’s office computer system was hit by ransomware that encrypted all of his customer files (personal information, xrays, insurance information, accounting records, etc.), including backups. The dentist experienced a significant business income and extra expense and accounts receivable loss.
The adjuster’s voluminous denial letter cited almost every exclusion in the policy, from “wear and tear” and “mechanical breakdown” to “faulty workmanship,” none of which stood up to challenge. Finally, the adjuster conceded coverage and was prepared to pay the claim. However, the agent knew that there was no “direct physical loss” as required by the policy’s insuring agreement, being aware of relevant case law that affirmed that.
Should the agent provide this information to the adjuster? A similar dilemma… A building contractor assembled a carport and left for the weekend, promising to return Monday morning for some final adjustments, mainly adding a couple of bolts. During a weekend storm, the carport flew away causing a lot of damage. The adjuster wouldn’t pay for damage to the carport under the contractor’s CGL, citing several exclusions, including: “Property damage” to “your product” arising out of it or any part of it. However, “your product” is defined as “Any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by….” So, the agent argued that the carport, now affixed to the land, was real property, so the product exclusion did not apply.
The adjuster then cited the following exclusion: “Property damage” to…That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it…this exclusion does not apply to “property damage” included in the “productscompleted operations hazard”. The agent pointed out that the “productscompleted operations hazard” said that “…Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed,” arguing that this was a completed operations claim and the exclusion, therefore, didn’t apply. At this point, the adjuster conceded that the claim was covered and was prepared to cut the check. However, the agent knew that a so far unmentioned exclusion applied: “Property damage” to “your work” arising out of it or any part of it and included in the “productscompleted operations hazard”…
Does the agent bring this to the adjuster’s attention or let him pay the claim?
William C. “Bill” Wilson, Jr., CPCU, ARM, AIM, AAM One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.
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AZALEAS—DID YOU KNOW?? All of the azaleas in the United States today originated in Lafayette, Louisiana.
In the late 1800s we were known as the Azalea Capital of the World. USL horticulturist H.R. Arbuckle is credited with grafting the gorgeous flower and spreading the color throughout the world.
The Trusted Choice® Brand: Part I Trusted Choice® is the brand of members of the Independent Insurance Agents and Brokers of America. Over the course of a few newsletters we will explore how the Trusted Choice brand came to be, what it means and how it helps member agencies. This installment covers the concept of brand at the highest level, and how the Trusted Choice brand came to be. Trusted Choice® is the brand of members of the Independent Insurance Agents and Brokers of America (IIABA or Big I). What does that mean, and why should member agencies care? The concept of brand can be confusing. The silhouette of an apple missing a bite and the Continued page 15
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ring containing a three-pointed star both represent brands. But the logos themselves are not the brand. A brand goes far beyond the color palette, typeface and visual logo. Simply stated, brand is what your customers think it is. Not what we think it represents. A company’s brand is what the customer believes.
If you are looking for a cup of coffee in an unfamiliar part of town or while traveling, there might be any number of coffee shops. Odds are however, that you’ll open the door to a Starbucks. If so, it isn’t because their coffee is superior to all of the other options. It is that their reputation for a good cup of coffee, a clean shop, and knowledgeable staff makes it an easy choice.
The brand tells you that you can get a good cup of coffee, and a number of food items, all made with care. The staff will be attentive and your order will be delivered quickly and with care. That is the promise of Starbucks: good service and tasty coffee.
The Trusted Choice® Origin Story A dozen years ago, the IIABA commissioned a study to determine what the insurance buying public thought of insurance agents. The results of the study pointed out some issues for the association and their members to address. The public didn’t understand the concept of agent or agency as we use it, and confused the term with other types of agents like the secret kind. They also were suspicious of the term ‘independent’ and some thought that it Continued page 16
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Continued from page 15
meant that the agent was representing their own interests more than those of the insured. The final conclusion of the report was that the average insurance consumer didn’t understand the differences between a captive agent and an independent agent. One of the big captive agency companies is playing off this understanding with a series of TV commercials involving a famous athlete, his sports agent, and his captive insurance agent. You may have seen these spots recently. WE may think that calling ourselves independent agents provides a distinction that consumers understand. Unfortunately, too many don’t, and that is why the Big I decided that a new brand would help.
Trusted Choice®: A brand that resonates The branding consultants proposed that the association create the Trusted Choice® brand, which could be used by members to distinguish themselves from other insurance agents, whether captive or non-association members. Our National Directors agreed. What does ‘Trusted Choice’ mean? Google offers up these definitions, which provide some clarity. • Trust: Belief in the reliability, truth, ability or strength of. Trusted can refer to either the agent and agency, or the carrier that is writing the policy. • Choice: A range of possibilities from which one or more may be selected.
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Choice also can refer to both the agent, since the insurance shopper is making a decision about which agency to work with, and the carrier that the agent selects on behalf of the client. If that is what we want the consumer to believe that our brand stands for, how do we make that happen? In the next portion of this series, we’ll explore the brand promise of Trusted Choice.
Brand Promise In order for a brand to successfully differentiate the business it must have a number of qualities. One of the most important of these is a brand promise that is delivered without fail. A brand promise is an extension of the brand itself, and it distinguishes what makes the brand tangible and distinguishable from other competitive offers. But to be effective, it can’t be an untruth or inconsistently delivered. If each Starbucks offered a different menu, and the customer service of each shop was highly variable and they were often dirty, chances are that they wouldn’t be the first choice. The reason they are is because they consistently deliver on their brand promise of an excellent customer experience.
is the best option, the Trusted Choice Pledge of Performance. The pledge offers some concrete guidelines to agency personnel on how they can deliver on the brand promise every day to customers and prospects. Some key points of the Pledge includes Trusted Choice agents commitment to their customers include: •
Identifying appropriate insurance products and companies
•
Thoroughly explaining coverages and options
•
Developing staff expertise to provide the best advice and counsel
Each of these points makes the promise of a Trusted Choice real to insurance consumers, and helps differentiate all members of the IIABA. As insurance offerings morph, and new competitors try to muscle in to the industry, it is vital that we continue to differentiate why Trusted Choice agents are the best option. When member agents deliver on the brand promise, we make the brand real to consumers and we gain new advocates who spread our message.
One of the powerful attributes of the Trusted Choice brand is that one of the key brand promises of members of the IIABA is stated clearly in the brand itself. We are the Trusted Choice. But what does that mean, and how does a member make that brand promise real to their customers? The IIABA has provided a very useful tool to explain to a consumer why a Trusted Choice agency
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ADVOCACY 3) IIABL Pac 4) Louisiana Legislature
Did you know that the IIABL website, www.IIABL.com, has an Advocacy section which includes an entire page dedicated to Frequently Requested Statutes The Advocacy section of our website consists of 4 sections: 1) Frequently Requested Statutes 2) Legislative Information including IIBL Legislative Summaries from 1997 to 2018.
Most of the questions we get from IIABL members can be answered in the Frequently Requested Statutes section of the IIABL website. Statues on Automobile Cancellations, Commercial Insurance Cancellation and Nonrenewal, Homeowner Cancellation and Nonrenewal, Agency Fees, Producer of Record, just to name a few.
Check out exclusive member only benefits at www.IIABL.com
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The Perils of Using Internet Explorer as Your Default Browser
When Microsoft released Windows 10 nearly four years ago, it included a new updated and modern browser called Edge. While Internet Explorer lived on due to some underlying code in Windows and for compatibility with legacy business websites, Microsoft no longer provides updates for Internet Explorer when new web standards are released.
Way too many insurance companies and technology vendors require the use of Internet Explorer to make their websites and web platforms fully functional. Microsoft has tried some different ways to push businesses to improve their older web apps but, unfortunately, IT administrators have naturally taken the easy route of continuing to rely on Internet Explorer and its various compatibility modes.
That’s a problem for the insurance industry. Continued page 20
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A recent article posted on the Microsoft Tech Community site authored by Chris Jackson highlights Microsoft’s concern about how business is continuing to rely upon Internet Explorer. “Internet Explorer is a compatibility solution,” warns Jackson, rather than a browser that businesses should be using every day for all web browsing activity. “We’re not supporting new web standards for it and, while many sites work fine, developers by and large just aren’t testing for Internet Explorer these days. They’re testing on modern browsers.”
The following chart shows the browsers used to access my website:
The Microsoft Edge browser has not been a great solution because it doesn’t deliver a compelling experience for consumers or businesses. It also was not available for older versions of Windows, including Windows 7. Microsoft has announced that they are building a chromium-based browser, but time will only tell how well that works and how well it is accepted.
Being required to use a legacy browser that is no longer supported for new web standards is not the position an agency wants to be in. If Microsoft no longer wants you to use their Internet Explorer browser, then you should find ways to make sure you are minimizing the impact in your organization.
The Google Chrome browser has won the browser wars, at least for now.
What has your organization done to eliminate Internet Explorer from your office?
So what?
What are the problems have you experienced?
So, I suspect some of you are wondering why I am spending time writing about this issue. What are the options for agents, brokers, and their staff? Here are a few thoughts about how you might think about the browsers your team should be using. Identify who is using what browser. If my website statistics reflect current agency usage, then the Chrome browser is the most used browser in your organization. Identify those users using the Chrome browser and note what sites work and don’t work. Pass that information on to other staff members. Identify legacy websites that require Internet Explorer. I suggest starting a list of the legacy website platforms that do not work correctly in Chrome. This list will provide an idea of how many sites still require Internet Explorer to operate appropriately. Talk to legacy website owners. Whether it’s an insurance company with a legacy website that requires Internet Explorer or a vendor or platform, make sure to contact them and express your concern about their use of old, outdated, and no longer supported software (Internet Explorer).
You can help others by sharing your tips and tricks.
Update Your Chrome Browser “Right This Minute”
This week’s TechTip is a Public Service
Announcement (PSA) for those of you who are using the Chrome browser. Several security researchers identified a “Serious Chrome zero-day” vulnerability. This just means that there is a vulnerability in the Chrome browser that hackers could exploit to gain access to your computer.
“A zero-day threat is a threat that exploits an unknown computer security vulnerability. The term is derived from the age of the exploit, which takes place before or on the first (or “zeroth”) day of a developer’s awareness of the exploit or bug … Attackers exploit zero-day vulnerabilities through different vectors.”
How to Check for the Latest Chrome Browser Update It’s quite simple to take a look and make sure your Chrome browser has been updated to the latest version which fixes the problem. 1. Access the “About Google Chrome” page by typing into the address bar the special URL chrome://settings/help. 2. On this page verify that the version number is Version 72.0.3626.121 (Official Build) (64-bit) for Windows users and Version 73.0.3683.86 (Official Build) beta (64-bit) for Mac users. If you have an older version, then you need to update immediately.
in a third-party library that other projects similarly depend on but haven’t yet fixed. This note simply means that Google will not release details about the vulnerability until most browsers have been updated with the fix. One of the best ways to protect your organization from a hacker is to make sure you update all software and platforms to the latest version. Continuing to use software with known vulnerabilities is merely a recipe for problems. What steps do you take to keep your programs updated?
Steve Anderson is the leading authority on Insurance Technology, Productivity & Profitability. Contact Steve at steve@steveanderson.com or 615.599.0085.
Google provides a bit of information on their release notes page. Note: Access to bug details and links may be kept restricted until a majority of users are updated with a fix. We will also retain restrictions if the bug exists Louisiana Agent 22
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RLI Personal Umbrella Rate Change Effective 4/1/2019 for New & 6/1/2019 for Renewals RLI Personal Umbrella rates will be changing as of 6/1/2019 for renewal business. RLI received approval for a modest rate increase and will be introducing additional rating changes at this time. Highlights to be aware of include: •
•
A 5% increase on Excess UM/ UIM rates. Incident surcharge for drivers under 22 and/or 80 and older have increased from $100 per incident to $200 per incident. In
addition, this question (question 14 on new business) will be split into 14a and 14b in PUP Access but will remain the same combined
•
question on the paper application. On new business, they removed the $100 surcharge for a driver licensed less than one year, with a permit, or international license (Question 13). A response greater than zero will continue to place the risk in PUP Special, and restrict to $1M coverage.
As always, the updated rates will be available by quoting within the RLI Portal at http://myportal.rlicorp.com and will be in compliance with state-approved filings.
REMINDER: Quoting & Binding RLI Personal Umbrella Policies The RLI Portal is available to producers and CSRs for both the Personal Umbrella and Home Business markets. Using the RLI Portal will allow you to quote new business, check the status of new business and renewal accounts, access underwriting information and print forms such as renewal applications, bills, policy forms and marketing materials. You also have the opportunity to use E-signature to
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electronically bind Personal Umbrella new business quotes. E-signature allows insureds to electronically review, sign and pay for a new business RLI Personal Umbrella ALL ONLINE!! This eliminates the step of having to mail your apps and payments to our office for binding.
If you have any questions regarding the Personal Umbrella or In Home Business markets through RLI, please contact Jamie Newchurch at jnewchurch@iiabl.com or 225.236.1350.
If you would like access to the RLI Portal, please contact Jamie Newchurch at jnewchurch@iiabl.com to request an invite. Each producer and CSR should have their own username and password. Binding New Business PUPs: Agents do not have binding authority on the RLI Portal. If the insured does not want to electronically sign the app and pay online through E-signature, then the application and payment will need to be mailed to the IIABL office for binding.
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An Untapped Market for Insurance Sales When most people think of flooding in the United States, they think of hurricanes and the coastal states. However, many significant rain events each year cause localized flooding for those living near rivers, creeks, bodies of water and in low lying areas. In fact, according to weather.com there have been more presidential flood disaster declarations over the past 10 years for inland states than for costal states. No state is immune from flooding. Yet fewer people are purchasing flood insurance than have in the past. The Associated Press reports that in 2017 only 5 million flood policies were in effect where 5 years earlier there were 5.5 million, a decrease of 10%.
With increased flooding and fewer flood policies being purchased it is a good time to start selling flood insurance. While I am not a real estate mogul, I have purchased 5 homes over the past 35 years. I have never been SOLD flood coverage. Each home I have purchased I asked my agent about flood coverage and each time I was told my lender does not require flood coverage, end of sales pitch. When I ask my agent about coverage for my wife's wedding ring, he does not tell me my lender does not require coverage for it. Instead, my agent asks for an appraisal and schedules the ring to my policy by endorsement. Wouldn't it make sense to treat flood insurance the same way? Following flood events, we see numerous flood related claims turned in on insurance agents'
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E&O policies. While some of these claims are justified, a great number of them are not. The leading reason we see claims for flood related losses is due to lack of flood coverage. Either the customer thought flood was included in their property policy or the agent told the customer they didn't need flood insurance. These claims are much easier to defend when flood coverage has been offered to the customer and the customer has rejected it. Better yet, if flood coverage is offered and accepted, we see no claim and the agent earns a commission. The NFIP manual and policy are constantly changing. If you are going to sell flood coverage, you need to understand what you are selling. The second most frequent reason we see for flood related E&O claims is a lack of understanding of the NFIP manual and policy. From experience, we have seen it works best to have someone in your office become an expert on the NFIP manual and policy. That person can stay abreast of the changes and help explain flood coverage to potential customers. Once you or someone in your office has mastered the NFIP policy, do not keep that information to yourself. Most insurance consumers are acquainted with the property policy, but not with a flood policy. It will help curb expectations of your customers if you explain to them the differences between a flood policy and a property policy. After a flood loss is not the time to be telling your customer that their coverage is not as broad as what they were expecting. My last two pieces of advice are to tear-up
your outdated flood zone maps and be mindful of elevation certificates. We see E&O claims where agents are using outdated flood zone maps. These claims are nearly impossible to defend. We also see claims where there is a delay in getting an elevation certificate or the elevation has changed due to renovations and the agent does not submit a new certificate. Be sure to document that you have told the customer you cannot obtain flood coverage until the property owner gets you the elevation certificate. Never offer to obtain an elevation certificate for a customer. I hope this article makes you look at how your agency sells flood insurance and points you to an untapped market of potential customers. While flooding could affect any property owner, the numbers tell us few are insuring against that risk. Take up the challenge to offer flood insurance to every property owner for whom you write coverage and make them decide whether they want to purchase or decline the coverage. With every offer you will either earn a commission or a defense against a subsequent E&O claim, when that customer does suffer a flood loss. Jim Redeker is vice president and claims manager at Swiss Re Corporate Solutions and works out of the office in Kansas City, Missouri. Insurance products underwritten by Westport Insurance Corporation, Kansas City, Missouri, a member of Swiss Re Corporate Solutions. This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice.
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Company
Number of Policyholders:
Coverage Type
Overall % Impact:
Overall $ Impact:
4-Homeowners
+0.8%
$295,911
14,102
New: 2/15/2019 Renewal: 4/1/2019
17-Other Liability Personal Umbrella & Excess
+5.0%
$109,048
1,835
New: 6/8/2019 Renewal: 8/7/2019
FCCI Insurance Co Monroe Guaranty Ins National Trust Ins
19-Commercial Auto
16.0%
$1,560,907
469
New: 10/1/2019 Renewal: 10/1/2019
XL Insurance America XL Specialty Insurance T.H.E Insurance Co
16—Workers Comp
-5.60%
-$385,464
188
New: 5/1/2019 Renewal: 5/1/2019
16—Workers Comp
-5.672%
-$2,458,265
5,440
New: 5/1/2019 Renewal: 5/1/2019
4-Homeowners
+9.0%
$1,503,632
2,017
New: 9/15/2019 Renewal: 9/15/2019
4-Homeowners
+5.0%
$83,329
5,604
New: 4/28/2019 Renewal: 5/2/2019
16—Workers Comp
-6.70%
-$1,531,696
1,033
New: 5/1/2019 Renewal: 5/1/2019
1—Property
7.1%
$203,398
169
New:8/15/2019 Revised: 8/15/2019
+10.214
$697,861
357
New:8/15/2019 Revised: 8/15/2019
FedNat Insurance Co Revised Rate & Rule Privilege Underwriters Reciprocal Exchange Revised Rate & Rule
Travelers Indemnity Co Travelers Ind Co of America Travelers Ind Co of Connecticut Travelers Casualty & Surety Travelers P&C Co of America
Changes
AIG Property Casualty Co
Homesite Insurance Co Revised Rate & Rule Bankers Standard Ins Co Indemnity Ins Co of North America Ins Co of North America Pacific Employers Ins Co Westchester Fire Ins Co Federated Mutual Ins Co Federated Service Ins Co Federated Reserve Ins Co Revised Rate Federated Service Ins Co Federated Reserve Ins Co
19-Commercial Auto
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Predictably Record-Breaking By: Brian Deitz Partner/Reagan Consulting The stats on the 2018 M&A market are in and the results are predictably off of the charts. Per SNL research, agent & broker M&A deals outpaced 2017 totals by approximately 7%, setting a new high of 597 deals announced. We’re in unchartered territory with the current M&A market, and the totals in the chart below represent only announced transactions. With many buyers – including very active buyers like Acrisure and BroadStreet – choosing not to announce all transactions, the actual deal total in our space is much higher. Our guess is that the industry is seeing deal counts that are more than double the deal counts from just 4-6 years ago.
The M&A volume is driving significant consolidation – there are now 13 brokers with over $1 billion in annual revenue. Five years ago, there were only 7. Of the 13 brokers in the billionaire’s club, six are private-equity backed. Led by these brokers, private equity completed almost 60% of the 597 announced transactions in 2018. The number of brokers chasing $1 billion is also significant, with the likes of BroadStreet, EPIC and Risk Strategies – among others – aggressively growing through acquisition and closing fast on the billion-dollar threshold. We believe that the consolidation frenzy at the top end of the market will continue to drive deal activity. In addition, agency performance continues to be strong (independent agent and brokers are predictContinued page 31
ing a 7.0% organic growth rate in 2019) and the economy, though slowing, continues at an adequate pace for agents and brokers. Record valuations don’t hurt the M&A market, either. In 2018, we saw a
measurable increase in multiples – could they go even higher in 2019? Either way, the private equity-driven land grab shows no signs of slowing down.
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The Myth of Agency Multiples Whenever agency principals get together, the topic of agency valuations is sure to come up. Someone will start talking about an agency that sold at an unbelievably high multiple. Pretty soon, everyone’s nodding their head and saying there’s a killing to be made selling your agency.
strong, but the steady increase in interest rates is likely to act as a governor on prices going forward. So if you really want top dollar for your agency when it’s time to sell, you need to realistically take stock of your firm and not let those dollar signs go to your head.
These types of discussions tend to be long on conjecture and short on facts. They remind me of the stories fishermen tell about the big one that got away. Rarely does anyone know the actual price that was paid for an agency. And even if they do, that doesn’t mean yours will sell for the same amount.
There are different ways to look at value. Some buyers pay attention to revenue multiples, essentially commission income. Others look at EBITDA (earnings before interest, tax, depreciation and amortization), or cash flow.
As we start a new year, let’s all resolve to more fully appreciate what creates agency value and how markets determine price. Mergers and acquisitions may still be going
I’ve always felt the revenue approach is flawed because it doesn’t take into account the cost of generating income. If you’re spending a dollar to make a dollar, that’s not a very efficient operation. The cash-flow model is a better indicator of the quality of an agency’s earning power. That is, your agency’s value comes from your ability to drive sustained cash flow over time. Regardless of how you measure value, higher -performing agencies will always sell for a premium. It’s no different than when the best maintained house in the neighborhood goes on the market. You know it’s going to sell for top dollar. Which brings me to another point: The market is the price at which a buyer is willing to pay a seller. You may think your fixer-upper agency is worth a lot more, but if no one wants it at that price — well, it’s not really worth that, is it? Those high prices you keep hearing about are usually when a large strategic buyer has purchased an agency because it folds nicely into its portfolio. They may not apply to your situation. So how do you increase value so you will get the highest price possible? Here are six tips: Continued page 34 Louisiana Agent 32
1. Find out what your agency is really worth. Hire a professional to help you assess your firm’s value. This will give you an objective starting point for improving your agency. 2. Build value in your agency. Invest in new office systems and improved servicing. Hire top talent; add producers. This is called organic growth, or sweat equity, and it’s the best way to increase the value of your firm. 3. Buy something. You can also grow inorganically by acquiring a book of business or merging with a smaller agency. Look for opportunities that make strategic sense and that you can afford. 4. Become more efficient. Not every revenue dollar is equal. Look for income streams that don’t cost as much to support. Consider ways to automate processes and streamline marketing
and servicing. Reduce unneeded expenses. With each business decision, ask yourself: “How does this affect my cash flow?” 5. Groom your successor. Have a plan for how you will transfer ownership. 6. Don’t wait. Time is a big factor in creating value. The more time you have, the more value you can create. Ten years is a good window. Don’t wait until you’re ready to retire. Country-club multiples, as I like to call them, are fun to talk about — but they should never form the basis for determining the value of your agency. Resolve to get real about the worth of your agency in 2019. Don’t let opportunity slip away because you failed to build value in your firm.
By: David W. Tralka, CEO, InsurBanc
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Report on the March IIABL Board Meeting The IIABL Board of Directors met in Baton Rouge on March 22, 2019. Board members present included Johnny Beckmann, Brenda Case, Joe Cunningham, Rob Eppers, Stuart Harris, Ross Henry, Bret Hughes, Harry Kelleher, Brother Marine, Philip “Phe” McMahon, Lydia McMorris, Brittany Mohr, Eugene Montgomery, Joe Montgomery, Joey O’Connor, Paul Owen, Teeny Perret, Neil Record, Robert Riviere, Lee Schilling, Armond Schwing, Mike Scriber, Don Stiel, Brad Bourg, Jeff Albright. IIABL Past President Neil Record reviewed IIABL Bylaws Article 2: Board of Directors, Section D, Terms of Office. The IIABL Nominating Committee recommended that the board revise the Bylaws to clarify that members of the Executive Committee and IIABL officers are allowed to serve after their term
limit as a board member. Proposed amendment: TERMS OF OFFICE: The Board of Directors shall be elected to two (2) year terms starting July 1 following their elections and shall be limited to four consecutive two (2) year terms of office. However, a board member may serve an additional two-year term on the Executive Committee, or additional years as an elected officer of IIABL. On a motion by Mike Scriber with a second by Lydia McMorris, the IIABL Board voted to amend the Bylaws without objection. IIABL Secretary Treasurer, Brenda Case reviewed the proposed 2019-2020 IIABL budget. On a motion by Robert Riviere with a Continued page 36
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Webcasts E&O Risk Management Click above for schedule Available on Demand
4/11 10:30am - 12:30pm 9 Rules for Reading a Policy on Law of Insurance Contracts 4/16 8am - 11am Construction Contracts: What the Agent Should Know, Do and Not Do
Ethics Click above for schedule Available on Demand
Flood Click above for schedule Available on Demand
Commercial & Personal Lines Courses Click above for courses & dates for 2019
4/17 12pm - 3pm Insurance Issues For Today's World
4/25 12pm - 3pm 3 Keys to Getting the Named Insured Correct
4/30 12pm - 3pm Alphabet Soup: The Mistakes and Coverage Behind D&O, EPLI, FLI, and EBL
4/23 1pm - 4pm 5 Contractor Coverage Concepts
4/25 12pm 3pm WWC Part 2: Legal & Contractual Principles
Seminars E&O Risk Management May 14—Monroe May 15—Lafayette May 16—Baton Rouge May 17—Metairie
Events April 11th IIABR Luncheon Juban’s Restaurant
May 2nd IIABR Golf Tournament TOPGOLF 2pm –5pm
On-Demand Webcasts
Pre-Licensing
Click here for the course catalog of all of the on-demand webcasts. Reminder– all of the IIABL online courses do not require a test for CE Credit
Online prelicensing 3 optional study packages Click here for additional information
May 22nd Young Agents Day @ The Races Bossier City
June 16 –19 Annual Convention Destin, FL
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second by Bret Hughes, the IIABL Board approved the 2019-2020 Budget without objection. IIABL Legislative Chairman Mike Scriber reviewed the 2019 legislative session. The Louisiana Department of Insurance has eleven bills this year, none of which are very controversial. Legislators are limited to five bills of general jurisdiction since this is a fiscal legislative session, so the overall number of insurance related bills is expected to be lower than usual. IIABL is currently tracking 80 bills of interest. The most important bill of the 2019 Session is HB 372 – the Omnibus Premium Reduction Act of 2019 by House Insurance Committee Chairman Kirk Talbot. This is the auto/tort reform bill intended to address the automobile insurance crisis in Louisiana. Send an email to fberendson@iiabl.com with the subject line HB 372 for a $25.00 gift card drawing. The bill reduces the jury trial threshold to $5,000, re-
peals direct action, and requires medical expense transparency (collateral source). The bill also extends the current one-year prescription period to two-years. In order to ensure that cost savings are passed on to consumers, the bill mandates that insurers file their loss experience with LDI 12/24/36 months after implementation of the bill, and mandates that LDI reduce rates to consumers as experience improves. IIABL President Johnny Beckmann reported on the very successful IIABL Education Conference and previewed the 2019 IIABL Convention. IIABL Secretary Treasurer Brenda Case reviewed the January 2019 Financial Statement. On a motion by Paul Owen with a second by Eugene Montgomery, the IIABL Board voted to approve the January 2019 Financial Statement without objection. Continued page 37
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IIABL National Director Lee Schilling reported on the IIABA National Legislative Conference. IASC President Brad Bourg provided the board with an update on the Independent Market Solutions market access program. IIABL CEO Jeff Albright reported on the 2019 membership renewals Young Agents Committee Chair Brittany Mohr reported on the Young Agents Crawfish Boil, April 5th and the Young Agents Day at the Races, May 22nd. Stephen Waguespack, President of the Louisiana Association Business & Industry talked to the board about the importance of 2019 elections and the effect of term limits,
the political activities of LABI PACs, the Louisiana Free Enterprise Institute strategies and the 20/20 Judicial Vision Plan for auto/tort reform. IIABL CEO Jeff Albright reviewed IIABL’s work with the Louisiana Free Enterprise Institute (LFEI) on communications and education efforts on auto/tort reform. LFEI and IIABL developed a proposal to print auto/tort reform push cards for insurance agents throughout Louisiana. The plan involves printing 1,000,000 brochures to be distributed through IIABL members, PIA members, State Farm agents, Farm Bureau agents, Allstate agents, and anyone else who supports auto/tort reform. On a motion by Paul Owen with a second by Ross Henry, the IIABL Board voted to approve a $50,000 contribution to the Louisiana Free Enterprise Institute to fund the auto/tort reform push card campaign without objection. The meeting was adjourned.
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The Cybersecurity Two-Step In February, IIABL distributed comprehensive information to member agencies related to cybersecurity requirements and a broad range of tools to comply with cybersecurity requirements that we call the Cybersecurity Compliance Bundle.
Since New York state has adopted the toughest insurance cybersecurity regulations in the country, IIABL has worked with the Big I of New York to develop an Agency Cybersecurity Internal Risk Assessment that you can find HERE.
The feedback we received from our member agencies is that we provided way too much information and too many tools. Agents felt overwhelmed and unable to implement such an extensive cybersecurity program.
We have also developed a Sample Agency Cybersecurity Program that you can find HERE. It is relatively easy to edit this Sample Program to create your own agency cybersecurity program that meets your needs.
So, here is the simplified cybersecurity twostep:
Cybersecurity compliance can be overwhelming. IIABL provides you with the tools to make it easier.
1) Conduct an Agency Cybersecurity Internal Risk Assessment 2) Develop an Agency Cybersecurity Program
The Cajun Two-Step The first form of traditional cajun music began before the 20th century in south Louisiana. When the Acadians came from New Brunswick & Nova Scotia to Louisiana in 1764, they brought with them many beautiful ballads that told stories of bygone years. Many of these songs can be traced back to France and many songs from France drifted to the bayou and the prairie region via Nova Scotia and New Orleans. These ballads are not widely performed today, but were the basis of what is now accepted as cajun music. In the late 19th cenons were introduced adopted by both Cacians. Cajun and this time grew in steps and waltzes played by accordion and fiddle.
tury, affordable accordiinto Louisiana and were jun and Creole musiCreole musical styles at parallel: mostly twomeant for dancing,
Watch the Cajun Two-Step by clicking on the pic (not to be confused with the Cybersecurity Two-Step) Louisiana Agent 38
GOLD LEVEL
SILVER LEVEL
BRONZE LEVEL ACADIAN MANAGERS
ACCIDENT FUND
EMPLOYERS
FCCI GROUP
HIGHFLYER HR
HOMEBUILDERS SIF
LIBERTY MUTUAL
LUBA WORKERS’ COMP
SUMMIT CONSULTING
WRIGHT FLOOD
AMERICAS INSURANCE FOREST INSURANCE IROQUOIS SOUTH RPS COVINGTON
EMC INSURANCE GULFSTREAM P&C LANE & ASSOCIATES STONETRUST INSURANCE
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IIABL 2018—2019 BOARD OF DIRECTORS & OFFICERS
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